FED. DEPOSIT INS. CORP. v. STATE OF N.Y.

FEDERAL DEPOSIT INSURANCE CORP., PLAINTIFF,v.STATE OF NEW YORK AND CITY OF NEW YORK, DEFENDANTS.

The opinion of the court was delivered by: Sprizzo, District Judge.

MEMORANDUM OPINION AND ORDER

Plaintiff Federal Deposit Insurance Corporation ("FDIC")
brings this motion to reargue the Court's decision that its
claims are barred by the Tax Injunction Act, that the Eleventh
Amendment bars its claims against the State of New York, and
that it lacks standing to bring this action. See Federal
Deposit Insurance Corp. v. State of New York, 718 F. Supp. 191
(S.D.N.Y. 1989).*fn1 FDIC's motion to reargue is based
principally upon a provision of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989, Pub.L. No.
101-73, § 209, 103 Stat. 183, 216 (1989), which amended the
provisions of the Federal Deposit Insurance Act, 12 U.S.C. § 1811
et seq. (1988), to provide that the FDIC "in any capacity,
shall be an agency of the United States for purposes of section
1345 of title 28, United States Code, without regard to whether
the Corporation commenced the action."*fn2 12 U.S.C.A. §
1819(b)(1) (1989). The FDIC argues that this statute makes the
FDIC a federal instrumentality for purposes of the Tax
Injunction Act and the Eleventh Amendment. For the reasons that
follow the Court rejects these arguments and adheres to its
original opinion.

DISCUSSION

The Tax Injunction Act

The Tax Injunction Act, 28 U.S.C. § 1341 (1982), serves to
prevent a federal court from interfering with the collection of
state taxes where there is an appropriate method of resolving
disputes between a taxpayer and the state in the state courts.
There is, however, an exception to that law where the party
subject to the state tax is a federal instrumentality. See Moe
v. Confederated Salish & Kootenai Tribes, 425 U.S. 463, 470, 96
S.Ct. 1634, 1639, 48 L.Ed.2d 96 (1976).

The FDIC contends that its status as an agency of the federal
government for purposes of a jurisdictional statute excepts it
from the Tax Injunction Act. However, the FDIC has been made a
federal agency only for purposes of 28 U.S.C. § 1345, which
vests subject matter jurisdiction over cases involving federal
agencies in the district courts. That statute expressly
provides that such jusrisdiction is subject to exceptions
created by Congress. Id.; see Federal Savings & Loan Ins. Corp.
v. Ticktin, ___ U.S. ___, 109 S.Ct. 1626, 1628, 104 L.Ed.2d 73
(1989). Moreover, there is no indication in the Federal Deposit
Insurance Act that Congress intended to exempt the FDIC from
the Tax Injunction Act or intended anything more than a limited
grant of "federal agency" status to the FDIC.

Nor does Moe, supra, support the FDIC's position. In that
case, the Supreme Court held that 28 U.S.C. § 1362 (1982)*fn3
was intended to allow the Indian tribes a right to sue in
federal court that was at least as broad as that of the United
States when it sued as the tribes' trustee. See
425 U.S. 474-75, 96 S.Ct. at 1641-42. Therefore, when the Indian tribes
sued on their own behalf, they were essentially in the same
position as the United States and were not barred by the Tax
Injunction Act. See id.; see also Oneida Indian Nation of New
York v. New York, 691 F.2d 1070, 1079-80 (2d Cir. 1982)
(applying Moe in Eleventh Amendment context), cert. denied,
474 U.S. 823, 106 S.Ct. 78, 88 L.Ed.2d 64 (1985). The reasoning of
that case has no application to the FDIC which, as the Court
noted in its original opinion, is an "entity quite separate
from the United States." Federal Deposit Ins. Corp., supra, 718
F. Supp. at 194-95.

Moreover, the jurisdictional statute in that case, 28 U.S.C. § 1362,
did not contain the limitation on jurisdiction, noted
above, set forth in 28 U.S.C. § 1345. The Court therefore
adheres to its original conclusion that the FDIC may not avail
itself of the federal instrumentality exception to the Tax
Injunction Act.

The Eleventh Amendment

Plaintiff further argues that the amendment to the Federal
Deposit Insurance Act also makes it the United States for
purposes of the Eleventh Amendment. See United States v.
Mississippi, 380 U.S. 128, 140, 85 S.Ct. 808, 814, 13 L.Ed.2d
717 (1965) (suit by the United States against a state not
barred by the Eleventh Amendment). The FDIC contends that in
light of this statute, it is now analogous to the Federal
Savings and Loan Insurance Corporation ("FSLIC"). See Federal
Savings & Loan Ins. Corp. v. Director of Revenue, 650 F. Supp. 1217,
1221 (N.D.Ill. 1986) (FSLIC is a United States for
purposes of the Eleventh Amendment). That case, however,
assuming that it is correct, involved a statutory grant of
federal agency status that was far broader than the statute
here. 12 U.S.C. § 1730(k)(1)(A) (1988) provides that,
notwithstanding any other provision of law, the FSLIC "shall be
deemed to be an agency of the United States within the meaning
of section 451 of Title 28."*fn4 In addition, 12 U.S.C. § 1725(c)
Page 29
(1988) states that the FSLIC "shall be an instrumentality of
the United States . . ."

The grant of authority to the FDIC, on the other hand, is
much more limited. The statute detailing its corporate powers
omits any statement that it is an instrumentality of the United
States. Compare 12 U.S.C.A. § 1819(a) (1989) (FDIC) with
12 U.S.C. § 1725(c) (1988) (FSLIC). Moreover, as noted above,
Congress made the FDIC an agency of the United States for
purposes of a jurisdictional statute only. The FSLIC, on the
other hand, is an agency of the United States within the
general definition of the word "agency." Accordingly, the Court
concludes that Congress specifically limited the FDIC's status
as an "agency" of the United States and therefore adheres to
its original holding that the Supreme Court's ruling in Smith
v. Reeves, 178 U.S. 436, 449, 20 S.Ct. 919, 924, 44 L.Ed. 1140
(1900), that federal corporations are barred from bringing
suits against the state by the Eleventh Amendment, prevents the
FDIC from maintaining this action against the state of New
York.*fn5

CONCLUSION

For the reasons stated above, plaintiff's motion for
reargument of the Court's prior decision that this Court lacks
subject matter jurisdiction is denied. The original Opinion and
Order stands as reported and the above-captioned action ...

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